UAE Mulls Corporate Tax Introduction

by Lorys Charalambous, Tax-News.com, Cyprus

10 January 2002

The Federal National Council (FNC) announced on Tuesday that it is seriously considering the possibility of levying a corporate tax on businesses based in the region.

At present, with the exception of banks and oil companies, no corporate income tax is payable by businesses established in the United Arab Emirates. However, following a house committee report on the role of the private sector in the national economy, there are concerns that the business community is contributing too little, due to the absence of an effective tax net.

The FNC session explained that the problem, at least in part, may stem from the fact that since an open market economy was adopted over 20 years ago, the business sector has become dominated by expatriates who choose to take advantage of the region's sophisticated banking resources rather than inject their own capital into the national economy.

Other proposals raised included the establishment of a supreme body to oversee the country's financial sector, and a strengthening of the supervisory role of federal economic institutions.

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